Microsoft Surface RT more profitable than iPad

SAN FRANCISCO—Microsoft Corp.'s Surface RT tablet generates a higher profit per unit than a comparable version of Apple Inc.'s wildly successful iPad, according to a teardown analysis performed by IHS iSuppli.

According to the IHS Teardown Analysis Service, the Surface RT model with a minimum of 32 gigabytes of NAND flash memory and an optional black Touch Cover carries a bill of materials (BOM) of $271.00. Adding in $13 in manufacturing expenses, the total cost to make each Surface rises to $284, according to IHS.

Microsoft retails the 32-gbyte version of the Surface with the Touch Cover for $599, generating a profit of $315 per unit, according to the IHS analysis. Even at a price of $499 without the Touch Cover, Microsoft will generate a profit margin that is greater than the low-end iPad in both percentage terms and on a per-unit basis, according IHS.

"The Surface represents a key element in Microsoft’s strategy to transform itself from a software maker into a devices and services provider," said Andrew Rassweiler, senior principal analyst of teardown services at IHS, in a statement.

According to Rassweiler, a key to Microsoft's strategy is offering hardware products that generate high profits on their own. "From a hardware perspective, Microsoft has succeeded with the Surface, offering an impressive tablet that is more profitable, on a percentage basis, than even the lucrative iPad based on current retail pricing," Rassweiler said.

Significantly the lower cost probably comes from a sub-par display that has rather low resolution for its size. My 4.8" phone has a 1280 x 720 display, almost the same resolution as Microsoft's 10" display. And no comparison to the iPad3...

At the current prices. No it wont. If they priced at kindle/nexus7 levels, then maybe. The only adv of surface is that it has MS Office. However MS is releasing an iOS version of office soon. So no reason to buy surface over ipad.